Thomas Bo Joergensen Mikkel M. Krogsgaard Jonas H. Levring Stefan K. Madsen Creating New Markets Tietgen Consultancy Inc. A Legacy of Growth

Thomas Bo JoergensenMikkel M. KrogsgaardJonas H. LevringStefan K. Madsen

Creating New Markets

Tietgen Consultancy Inc.A Legacy of Growth


2

The vCustomer winning formula

“Where do we expand? And how does the geography interact with our choices about what services to provide and what verticals to serve?”

Sanjay Kumar


3


Bulgaria will be your launch pad for becoming the market leader of BPO within travel, hospitality, & retailing in Europe.


4

The situation today

BPO(Business Process Management)

CRM(Customer Relations Management)

Type of business

15 % 85 %

Industry

Share of revenue

Services

- Customer Care Solution- Contact Center Consulting- Technology Help disk- Integrated CRM Solution- Knowledge Solutions

- Data management- Data Mining- Data processing- Data Validation- Data Entry- Content Digitalization

Information Technology Enabled Services

Where to go What to offer How to do it Tomorrow


5

You are serving four industries

Retailing

Travels &Hospitality

Telecom

Technology



6

Finding low cost and stable environment



7Where to go What to offer How to do it Tomorrow

Sorting by education and labor regulation


8

Over 40 indicators!

Ease of Doing Business Rank, Starting a Business: Rank, Procedures (number), Time (days), Cost (% of income per capita), Min. capital (% of income per capita), Employing Workers: Rank, Difficulty of Hiring Index,

Rigidity of Hours Index, Difficulty of Firing Index, Rigidity of Employment Index, Nonwage labor cost (% of salary), Firing costs

(weeks of wages), Paying Taxes: Rank, Payments (number), Time (hours), Profit tax (%), Labor tax and contributions (%), Other taxes (%), Total

tax rate (% profit), Enforcing Contracts: Rank, Procedures (number), Time (days), Cost (% of debt), Economy Characteristics: GNI per capita (US$),

Informal economy estimate (% GNP), Population.

Macroeconomics: Total GDP 2004 (bUSD), Recession expectations, Business Cost of Terrorism, Impact of Rules on FDI, Goverment Surplus/

defecit 2004, Inflation 2004,Technology: Firm-level Tech Readiness, Quality of Competition in the ISP Sector that insure quality, Extent of

Business Internet Use HR: Quality of Educational System, Quality of Math and Science Education, Ease of Hiring Foreign Labour, Life Expectancy, Infrastructure: Overall infrastructure, Phone infrastructure, Government:

Judicial independence, Efficiency of Legal Framework, Reliability of police services, Business Cost of Crime and Violence, Business Cost of Corruption, Foreign Ownership Restrictions, Restrictive Labour

Regulations

Doing Business 2006

World Global Competatitiveness Report 05-06



9Where to go What to offer How to do it Tomorrow

From twenty to five


10

Top five countries



11

Quality of living

Cost of living

Avg. monthly wage

MHL$239Bulgaria

MHM$500Hungary

MHM$763Slovakia

MHMH$750South Africa

LVLL$89Mexico

Top five countries


Avg. monthly wage in US dollarsCost of living: Low, Medium, HighQuality of living: Very Low, Low, Medium, HighSource: Mercer among others


12

Finding your client market

05

101520

253035

4045

Retailing Travel & Hospitality

Europe International

Billion $



13

Finding your client market

05

101520

253035

4045

Retailing Travel & Hospitality

Europe International

Billion $

Total European market value:

$ 76 billions



14

Covering the languages

English~64 mill

Spanish~41 mill

French~60.5 mill

German~98 mill

Italian~58 mill


Total: ~321 mill


15

What can Tietgen Consultancy offer?

Tietgen Consultancy will assist you in:

• Entering Bulgaria

• Developing product portfolio for BPO automation for the new European markets



16

How to develop product portfolio

Analyze market to fit customer needs in automation

Define additional services for vertical automation

Create PDRs for cheap programming in India



17

Entering Bulgaria

Bulgaria can be entered by:

• Acquiring partner

• Setting up a Bulgarian BPO-joint venture by exploiting existing partnership



18

Your choice

Go with Tietgen

Go to Bulgaria

= choice

Joint venture

Acquisition

First thing Monday morning:

We will perform a due diligence to decide between the two

options


Our immediate recommendation Joint venture with existing partner


19

Financial assumptions

Assumptions

• CRM revenues: Low growth 5–6% • BPO revenues: High Growth 20-30%• Productivity: Parameter adm

expenses/revenues• CRM adm exp/rev: Will fall with 2-3%

points• BPO adm exp/rev: Will fall with 4-6%

points



20

Financial effects


Forecast-EBITDA-Margin

6,00%

8,00%

10,00%

12,00%

14,00%

16,00%

2007 2008 2009 2010

EB

ITD

A/

Reven

ues

8.96%Worst case: 8.60%

Likely case: 12.90%

Best case: 16.24%


21

Key Performance Indicators

K2

K3

K4

K5 Reaching market goal in European BPO

Increase brand awareness

Research in new markets and opportunities

Ensure high quality

Establish joint ventureK1



22

Key Performance Indicators - Timeline

Em

phasi

s

Low

High

Mid

/200

7

K2

K3K4

K5

K1

When to measure

End/

2007

Mid

/200

8

End/

2008

Mid

/200

9

End/

2009


K2 K2 K2 K2


23

Risk

AcquireJoint

venture

Government 3 3

HR 2 2

Infrastructure 2 2

Specifics 4 3

Technology 5 5

Avg. risk 3.2 3

Go with Tietgen

Go to Bulgaria

= choice

Joint venture

Acquire

Cost + ? 2

Control - 4 4

Compliance + 5 4

Possible - ? 4

Supplier dependence + 1 4

Total risk = ? 2

Note: Macro-risk is compared to the 3rd sorting of countries

Risk with Tietgen = 0

Total risk

Acquisition (?+3.2) = ?

Joint venture (2+3) = 51 = low, 5 = high



24


Bulgaria will be your launch pad for becoming the market leader of BPO within travel, hospitality, & retailing in Europe.


25

Q&A

Q&A

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Where What How

Miscellaneous


26

Q&A – Situation

Q&AWhere What How

Presentation BackupServices today

New industries

Competitors

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


27

Q&A – Countries

Q&AWhere What How

Presentation BackupOver 40

Top five

Not China

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


28

Q&A – Markets

Q&AWhere What How

Presentation BackupClient market

Languages

Client market detail

Competitors

BPO definition

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


29

Q&A – Offer

Q&AWhere What How

Presentation BackupWhat can TC Tietgen

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


30

Q&A – Develop portfolio

Q&AWhere What How

Presentation BackupDevelop Tietgen

Horz vs. Vert

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


31

Q&A – Entering Bulgaria

Q&AWhere What How

Presentation BackupOptions Pros vs. Cons

Choice Not China

Bulgarian partner

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


32

Q&A – Finance

Q&AWhere What How

Presentation BackupAssumptions Assumptions in detail

Effects

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


33

Q&A – KPI

Q&AWhere What How

Presentation BackupList KPI detail

Timeline

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


34

Q&A – Risk

Q&AWhere What How

Presentation BackupRisk

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


35

Q&A – Miscellaneous

Q&AWhere What How

BackupHuman factor

Marketing

Service

Situation

Countries

Markets

Offer

Develop portfolio

Entering Bulgaria

Finance

KPI

Risk

Miscellaneous


36

KPI no.

KPI Title KPI Target Baseline When to be measured

How to measure Responsible

KPIs related to major business objectivese

K1 Establish joint venture Successful establishment

Q2/ 2007 Q4/2007 No measurement Executive management

K2 Ensuring high quality within the services offered to clients and within the partners workforce

One quality supervisor for every 16 agents

Q2/ 2007 Continuously Conduct random quality checks on employees

Middle management

K3 Research in new market opportunities and potential clients within the European market

Contracts within $200 $1,000 mill/month

Q1/2008 Financial control etc. Executive management and Tiegent Consultancy

K4 Increase brand awareness in the European market within the Healthcare, Travel & Hospitality and retailing industries

N/A Q1/2008 Q3/2008 Marked surveys London sales office

K5 Reaching market goal in European BPO

72 USD Q3/ 2008 2010 Measure on revenue for the BPO in the Healthcare, Retailing and Treavel & Hospitality Division. The marketing team, should also conduct marketing surveys

Marketing team

Key Performance Indicators


37

Assumptions in Detail

GrowthCRM: The market has been fairly exploited and growth has slowed:

Hence Low growth 5 – 6% (Bulgaria inflation 4,1%)BPO:The Offshoring market is expected to grow at 20 - 25%. As CRM

growth is assumed insignificant it is especially BPO- offshoring that will grow at this rate. Futhermore we plan to enter the European market where customers pay a premium: Hence High Growth 20-30%

ProductivityFor productivity we use Adm. expenses/revenues as a parameter.

Adm. expenses are considered mostly reliant on labour costs The initial ratios (2007) are estimated using peers within CRM and

BPO. By moving to low wage country Bulgaria we expect the productivity to rise and hence the parameter to decline:

In CRM: Will fall with 2-3% points. In BPO: Will fall with 4-6% points. This decline is catalysed as more

and more labour/total labour is moved to Bulgaria. The decline will also rely on the degree of BPO-automation.

This will eventually stagnate -> European union will most probably align wages over time as the country matures.


38

Competitors - % of firms by region


39

Competitors – Revenue group vs. offshore firms

Group1 100 MM -

Group2 100-500 MM

Group3 500-999 MM

Group4 1 B +

Group5 1-5B

Group6 5 B+


40

Competitors – East EU offshore firm distribution


41

Bulgaria pros and cons

Pros Vs Cons1. Good government economy 2. Few irregular payments in

tax collections3. Medium tax4. Good technology

infrastructure and penetration

5. Easy hiring and firing practises

6. High and available human capital at low cost

7. Regression expected -> will maintain sufficient work pool.

8. Easy to start a business 9. Partnership established

1. High real effective exchange rate and undeveloped financial market.

2. Inflation3. Credit rating4. Organized crime 5. Complex tax system6. Little reliance on pro

management7. Little tradition for authority

delegation8. EU entry will raise wages9. Negative impact of rules on

FDI


42

3 reasons not to go to China

1. Lots and lots of red-tape and government intervention.

2. Poor ICT-infrastructure.

Most importantly:3. You believe the cultural differences

to differ too much from you.


43

Finding your clients market

Europe:- Austria- France- Germany- Ireland- Italy- Spain- Switzerland- United Kingdom

International- Argentina- Australia- Canada- India- Mexico- New Zealand- South Africa- USA- Venezuela

Retailing

Travel & Hospitality

Languages

Total consumption

Million $ 34,246.16 Million $ 14,467.54

Million $ 41,867.11 Million $ 19,637.00

Million $ 76,113.27 Million $ 34,104.86

English, French, German, Spanish, Italian

English, French, Spanish

Factors

Regions

Source: Euromonitor


44

Customer Service Sales/ Telemarketing Back Office / Analytics

Customer queries (BPO)

Product info details (BPO)

Fault management (BPO)

Billing queries (BPO)

Change management

Warranty returns (BPO)

Third party verification

Order processing (BPO)

Order management (BPO)

Presales (CRM)

Cross-sell / up-sell

Telesales for extended warranty (CRM)

Telemarketing of co-branded credit cards (CRM)

Customer feedback management

Data entry/ processing

Forms and rebate processing

Inventory planning

Demand forecasting

Credit card management

Inventory management

Industry analysis

Marketing analysis

BPO

CRM

Retailing


45

Technology

Technology Support Account activation

Technical troubleshooting/networking support (L1, L2, L3)

IT products (desktops, PCs, laptops, PDAs, displays, printers, input/ output cards, routers, hubs, switches, hot spots & storage devices)

IT infrastructure (server monitoring, worldwide networks management, server maintenance support for Linux-based email, web, proxy, firewall , VPN, database, LDAP, customized applications)

Applications maintenance & support (ERP & CRM software)

Contact center solutions for process value additions in the areas of IVR, CRM/CTI focused application development & web enablement

Order fulfillment

Cross selling/up selling

Data entry and transaction processing

Billing support, inquiries and collections

Other support domains

BPO

CRM


46

Telecom

Operational Support Systems Product and SalesBusiness Support

Systems

Activation /Ordering

CRM software services - Client /manager CSR monitoring- CSR ID, and performance tracker- CSR desktop call handling software- CSR Recorder and DB search

Tech Product Support and troubleshooting - Mobile platforms- Networking devices- Storage

Consulting Services - Computer Telephony Integration

Helpdesk- Productivity Apps

Escalation Resolution

Network Service Management

Research and targeting

Cross-sell / Up-sell

Follow-up verification Consulting Services

- Regulatory support services - Product management support services - Project management support services

CRM

CSR Training

Account Maintenance

Warranty/Replacement Programs

Rebate Processing

Business Analytics


47

Travel & Hospitality

Customer Support Passenger Operations Transaction Processing

Information calls

Address changes

Loyalty programs

Up Sell/ Cross Sell

Schedule changes

Promotions/discounts

Collections

Grievance handling

Reservation processing

Fares/Rates

Seat allocation

Revenue management

Deal rate filing

Onward booking

Departure control

Loyalty program management

Baggage tracking/ Handling

Forms processing

Fare refunds

Procurement


48

Tietgen – A Legacy of Growth

AnalysisBased on quantitative and qualitative

methods with a high focus on thought through and practical implications centered around Value-driven profitability.

DeliveryWritten report and/ or presentation.Price policyProject driven.Recent clientsBiosonic, Aldi, Brightcove.com.


49

Why you should go vertical

Vertical Vs Horizontal• Long term• Higher service offerings• Stronger negating

position and customer loyalty

• Unique market position

• Short term• Lower service offerings• Weaker, but faster

negation• Wide market proposition


50

The Human Factor?

”Most clients are trying to eliminate the human factor altogether” – S. Kumar.

V as in virtual = transferable and measurable, yet still indispensable

The back office worker is a cost – The knowledge worker is an asset => All firms are trying to eliminate cost and increase assets.


51

Marketing

The London office will be the platform for all marketing coordination in Europe

Why:Good location, low cost (centralized

marketing structure)

Obstacles:The sales department is required to speak

all the languages in the offered to the European market


52

The meaning of the word ”service”

>>…let’s focus on improvement services rather than just services<<

Sanjay Kumar

Improving the service to vCustomer clients

Improving the service within the organisationvCustomers organisation


53

Bulgarian Partner

• Call Center Bulgaria(callcenterbulgaria.com)

• Established 2003 in Sofia• ”Operating in German, English, French and

Bulgarian with possibilities for other languages”

• ”..view to develop the main services of a modern contact center: inbound and outbound services for European, East European and domestic (Bulgaria) clients delivered from a multi-language low cost platform in South-Eastern Europe.”

Documents

Thomas Bo Joergensen Mikkel M. Krogsgaard Jonas H. Levring Stefan K. Madsen Creating New Markets Tietgen Consultancy Inc. A Legacy of Growth